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What is the best way to own your car in 2022?

There are several ways you can own your car. The key thing we all want to know is what is the best method for us to own our car based on our particular situation.

Here we will illustrate a few different methods of car ownership and compare their pro’s and con’s side by side.

We will conclude with how we rank the methods of car ownership and you can decide for yourself what you think is the best method of car ownership for you!

Traditional Car Finance

This method is familiar to most people. The main points here when looking at traditional car finance are the following:

The payment and/or interest rate
The terms of the payout. Are there any penalties?

Not too many things to consider here. And it is easily accessible as almost every car dealership and your bank offers this product.

Drawing on the Home Loan

If you have a home loan with an offset facility you may want to draw on this in order to pay for your next car. The most appealing thing here is that there will only be a slight increase to your mortgage payments. Also, the interest on your home loan is likely to be the lowest interest accessible in any context. One of the downsides however is that because of the structure of the payments many people end up paying for their car over 20 years or more. This results in paying a lot more for the car and a lot more interest in the end.

Novated Lease:

The Novated Lease. A very popular way of buying a car. This allows you to deduct the cost of your finance payments and running costs like fuel etc from your salary before tax is calculated. Almost like regular finance but with tax savings attached. This makes the cost of car ownership significantly cheaper and is a no brainer if accessible to you. One of the downsides is that it requires your employer to already offer Novated Leasing as an employee benefit or your employer must be willing to allow you to do Novated Lease so it may not be accessible to everyone.

Logbook Lease:

If you use your car for work, this is the best and becoming the most popular method of owning your car. The Logbook Lease takes into account your work use/business use driving which attracts significant tax savings which is then used to reduce the cost of your payments. This reduces the cost of car ownership by up to 40%. Another benefit is that it doesn’t require your employer in any way whatsoever so it is accessible to anyone who uses their car for work. One of the downsides is that it is only eligible for people who use their car for work but at a minimum of 51% and do a logbook for 12 weeks. Other than that it is a very accessible and effective method of car ownership.

Rankings:

1. Logbook Lease
If you use your car for work, this comes in at number 1. It reduces your cost of car ownership by up to 40% without needing to salary sacrifice or need your employer.

To be eligible you must use your car for 51% work use and do a logbook for 12 weeks.

Very accessible and very low payments.

2. Novated Lease
A great way to get some tax savings when owning your vehicle. You don’t need to be doing any work use or anything like that, you just need a willing employer to help you set it up.

3. Drawing on the Home Loan
If you have a home loan you can draw on, this will guarantee you get a super low interest rate. Just be wary of ketting the payments drag out for too long and make an effort to pay it down promptly. If you use your car for work however you this is not the optimal option as there are some other tax advantageous ways you can buy your next car.

4. Tradition Car Finance
When all else fails, you can always shop around and get yourself the best deal possible.

Be sure to find out the total cost of payments including fees and what it might cost you to payout early just in case a more effective option of car ownership becomes available to you further down the road. You can switch over without any trouble!